The movie Wall Street has gone down in history as one of the all time favorites among investors of all kinds.  Gordon Gekko, played by Michael Douglas portrays a confident stock and real estate investor with the world in the palm of his hand. Let’s hear what he has to say:

“Ever wonder why fund managers can’t beat the S&P 500? ‘Cause they’re sheep, and sheep get slaughtered.”

This article will show you how NOT to get slaughtered as a real estate investor in this market.  This sound advice will make you a much better investor therefore making you a lot more money.

First off I am not advocating Gekkos illegal activities at all, a lesson we can all learn is…play by the rules.  If you know the rules of the game inside and out you can play it to the limits, just abide by the rules and you’ll be fine  He lost everything by pushing the envelop way to far.

“I don’t throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought.”

Never buy a property until you know all the facts, throwing darts at a board is no way to do business in this market, in 2005 maybe but today you’ll get hammered.  Believe me I know. Here are 4 steps we take before pulling the trigger.

1. Always know what the projected appraised value will be after the renovation is complete, how do you do this?  Find appraiser and hire them as a consultant to analyze deals for you and give you a tight range of value.  For extra caution take 5% off the price for potential adjustments.

2. Get an estimate from a licensed contractor on what the renovation will cost.

3. Check with the city to determine if there are any open permits on file that could slow down the rehab.

4. Make sure you’re buying at 50%-60% of the future, after renovation value.  This will give you a good spread to make some money.

“I look at a hundred deals a day. I pick one.”

I talk to real estate investors all the time that look at, evaluate, make offers on only 1–3 deals a week. That’s OK if  you’re part time but if you want to make it big than try 100+ deals a week.  Finding great deals is not easy even in this market but if you spend enough time searching you will start to come across some amazing opportunities.  Here are 3 different sources where we find deals that work:

1. One of our preferred methods is the County Foreclosures Auctions, I only suggest this for seasoned investors because you have to make quick decisions and pay all cash in 24 hours.

2. Wholesalers are a great way to find good deals, most wholesalers are “flipping” to make quick profits.  If you would like to learn how to do this read my blog post on “How To Make Huge Money in Real Estate in 2009”

3. Bank Owned properties is my favorite because you have time to evaluate the deal and negotiate a price that you know will make sense.

“In ten minutes, it’s history. At 4 o’clock, I’m a dinosaur!” —Marv

“The most valuable commodity I know of is information.” —Gordon Gekko

Getting information fast is imperative in this business, when a deal comes across your desk, make sure you have the right tools to get comparable sale and market data fast.  Line this up prior, before you start looking, or have a realtor friend that can respond quickly to your requests.  By the time our competition has evaluate the deal and made a decision we already have it locked up and are clarifying closing details with the sellers.  That’s the the power of information.

“The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bull**it. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own.”

Buying and owning real estate right now in this market is harder than it use to be, but well worth the effort.  Wealth is created by finding out what everyone else is doing and do the exact opposite.  The masses are scared to death of real estate,  but we all know it will come back, the question is when.  If you own cash flow properties  it doesn’t really matter because the property will sustain itself.  Building a million dollar property portfolio is defiantly possible right now, you just have to know several techniques to capitalize on this market downturn.

Happy Investing

Sean

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